Owen said: "I said that my ideal situation was to start the season in the Real Madrid team and if not I would prefer to return to Liverpool.

"If the transfer cannot be finalised in time I have agreed to go to Newcastle."

Real Madrid director of communications Antonio Garcia Ferreras confirmed they had not had an offer from Liverpool.

He said: "This morning Real Madrid and Newcastle United have reached the principles of an agreement on the conditions of Michael Owen's transfer to the English club.

"There is still no agreement between Michael Owen and Newcastle. At the moment we have not received any offer from Liverpool."

Owen spent much of his first season at the Bernabeu coming off the bench and the arrivals of Brazilian strikers Robinho and Julio Baptista this summer have seen him slip further down the pecking order.

I have really enjoyed being part of his Real Madrid team

Michael Owen

The former Liverpool star had earlier indicated he was willing to stay and fight for his place, but after talks with president Florentino Perez has now had a change of heart.

He added: "I need to be playing regularly in World Cup year.

"I am most grateful to Senor Perez for his personal concern about my career. I have really enjoyed being part of his Real Madrid team."

Owen's return to Anfield would be welcomed by Liverpool fans, having scored 158 goals in 297 games in his first spell at the club.

Owen finished with 16 goals for Real last season despite being used primarily as a substitute.